Quick commerce startup Zepto has secured $665 million at a $3.6 billion valuation, nine months after the company raised $235 million at a $1.4 billion valuation, the company announced on Friday. Rival to Zomato’s Blinkit, Swiggy Instamart, and Tata-owned Bigbasket’s BB Now, Zepto raised the latest round from new investors Avenir, Lightspeed, and Avra (Y Combinator Continuity’s former MD Anu Hariharan’s new fund) and existing ones including Glade Brook, Nexus, and StepStone who co-led the round with Goodwater and Lachy Groom.
The fresh capital comes ahead of e-commerce company Flipkart’s big foray into the hyperactive quick commerce space reportedly in the coming weeks.
Zepto said its GMV (gross merchandise value) has grown to over $1 billion with around 75 per cent of its stores fully EBITDA positive as of May 2024. While these stores took 23 months to turn profitable earlier, the current time to profitability is six months, Zepto said.
Aadit Palicha, Co-founder & CEO, Zepto said the company’s stores turning profitable faster has enabled the company to grow rapidly while simultaneously achieving near EBITDA positivity at a company level.
“We plan to continue operating with fiscal discipline as we scale from 350 stores to 700 stores by reinvesting the capital generated from mature stores back into the business. If we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon,” said Palicha.
Focusing on further improving customer experience in the 10-minute delivery of goods across categories ranging from grocery and toys to fashion, jewellery, skincare and more, the company will be looking to launch new categories and expanding its membership programme Zepto Pass, according to the company’s co-founder & CTO Kaivalya Vohra.
Zepto plans to “hire top talent across engineering, product, growth, finance, operations, and category management” to build on this roadmap.
The crowded quick commerce space with intense competition among players sitting on significant cash pool is expected to further attract new and existing investors in the market to help companies corner larger market share.
According to a recent report by HSBC Global Research, Zepto’s market share grew to 28 per cent as of January 2024 from 24 per cent last year while Swiggy Instamart’s share dropped to 32 per cent as of January this year vis-a-vis 36 per cent last year and 52 per cent in 2022.
The latest funding round by Zepto also marked the formal launch of Avra Capital.
“We are thrilled to partner with Zepto once more, this time through Avra, marking our first global investment. Zepto may appear to be a mere 10-minute quick commerce company at first glance, but they are transforming Indian e-commerce by creating the ‘Hyperlocal Amazon,’ combining affordable prices with local convenience,” said Hariharan.
